About prepayment processing

The standard way of creating prepayments involves the following stages:

1. In the Purchase invoices (AP301000) window, you enter a supplier prepayment request as a document of the Prepayment type.
   You can specify line details (non-stock items or services). If the prepayment is intended for stock items, specify this in the description.
   When you save the prepayment, the system assigns it a reference number based on the number series assigned to invoices in the Supplier ledger preferences (AP101000) window.

   A prepayment may have one summary line or any number of detail lines.
   You cannot apply or withhold VAT on prepayments, but you can add VAT amounts to the prepayment amount for easier calculations.

   To facilitate auditing and user reference, you can attach to each prepayment an electronic version or a scanned image of the original supplier document.
   Also, you can attach a related document to each line of the document.
2. You can release the prepayment requests one by one by using the Purchase invoices (AP301000) window, or along with other supplier ledger documents by using the Release supplier documents (AP501000) window.

   A prepayment request, when released, does not generate any transactions.

3. If approval is required in your system, the prepayment request must be approved in the Approve invoices (Approval) (AP50200S) window before it can be actually paid.
4. You pay the prepayment by creating an supplier ledger payment, as you would to pay any other invoice, by using the Sales invoices (AR301000) window.
   The payment should be in the same currency and amount as the prepayment request.
   Cash discounts do not apply to prepayments.
5. You release the supplier ledger payment.
   When you do, the system changes its status to Closed and changes the status of the original prepayment to Open, so that you can apply this prepayment to invoices and credit adjustments.

You can pay prepayments created in this way by any payment method allowed for the particular supplier.

Alternatively, you can create a prepayment more simply, by using the Customer payments (AR302000) window.
Such prepayments also may have line details or just one summary line, and you can attach all the related files.

Even if approval of documents is required in your system, prepayments created in this way are not subject to approval.

Also, you cannot pay prepayments created in this way by a payment method that requires printing of payments, so when you are deciding how to create a prepayment, make sure at least one payment method can be used for this prepayment.

When the prepayment is released, the system generates a batch of the following transactions.

If you do not specify a separate account for prepayments, the supplier prepayments will be debited to the supplier's supplier ledger account.

When deciding how many and which prepayment accounts to use to make it easier to track them in the system, you can select one or any of the following options:

• To use a single prepayment account for all prepayments (to all suppliers)
• To specify prepayment accounts for particular supplier classes
• To specify separate prepayment accounts for specific suppliers

To assign the prepayment accounts, perform the following steps:

1. In the Supplier classes (AP201000) window, specify the prepayment account and subaccount for the default supplier class and for each of the other supplier classes.
   This will make it easy to create new supplier classes and new suppliers with the proper prepayment account specified.
2. Use the Suppliers (AP303000) window to specify the prepayment account and subaccount for each supplier.

You can apply the Open prepayment to invoices and adjustments. A prepayment may have a balance after it is applied to invoices and credit adjustments, and it can be released with balance. When the prepayment application is released, appropriate journal entries to the general ledger are made automatically, and the links to appropriate batches are displayed on the Application history tab of the Customer payments (AR302000) window.

A prepayment creates a batch of the following accounting transactions.

If a prepayment was incorrectly applied to invoices and adjustments and released, you can reverse the application if needed.
To do this, click the Reverse application action on the Application history tab of the Sales invoices (AR301000) window.
You can then apply the prepayment to other invoices and adjustments.

To view information about prepayments, you use the following windows:

• Supplier details (AP402000): Shows prepayment balances.
• Supplier details (AP402000): Displays the prepayment balance and particular prepayments by supplier.
• Balance by GL account (AP63200S): Shows all prepayments collected on the prepayment account.

The way you can correct errors on prepayments depends on the way you entered it.

If you need to correct errors on a prepayment that you created in the standard way, you have the following options:

• If the prepayment has not been paid, you can void it at any time by clicking Void in the window toolbar of the Purchase invoices (AP301000) window for the selected prepayment.
• If there were errors detected for a paid prepayment, you should create an adjustment instead of voiding the prepayment.
• If the prepayment has been paid, you void the associated supplier ledger payment.

If you need to void a prepayment that you created in the simplified way, you select the prepayment in the Customer payments (AR302000) window and click Void in the window toolbar.

If the prepayment to be voided has been applied, first unapply the prepayment, and then void it.

If a supplier did not use the prepayment or used it only partially, you can enter a refund and apply it against the prepayment.